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Retailers bag mixed results
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February 26, 1998: 11:47 a.m. ET
But The Gap and J. C. Penney are upbeat about the sector in 1998
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NEW YORK (CNNfn) - It was a different picture for retailers on opposite ends of the shopping mall at the end of a sluggish 1997, but two chains are dressing up for a rebound this year.
While J.C. Penney Co. said it weathered the storm for retailers last year, the Generation X haberdasher The Gap, Inc. couldn't meet the profit forecasts of Wall Street analysts.
The companies' fourth-quarter earnings reports, released Thursday, close the books on a lackluster year for retailers that marked the slowest sales gains since 1991.
Still, Penney said fourth-quarter profits, excluding a one-time charge for restructuring, rose to $365 million, or $1.36 a share. That beat consensus analyst estimates, as compiled by First Call, by three cents.
Late last quarter, Penney said it would close 75 stores, cut up to 4,900 jobs and take a charge of $225 million, or 50 cents a share, in the quarter. Including those charges, the company reported net income of 85 cents a share.
Following the announcement, Penney shares (JCP) rose to a new 52-week high before pulling back a bit Thursday morning to 69 7/8, up 9/16 in New York Stock Exchange trading.
The Plano, Texas-based chain also painted a rosy forecast for its Penney stores and its newly bought Eckerd drugstore unit in 1998.
Meanwhile, San Francisco-based Gap posted fourth-quarter earnings of $215 million, or 53 cents per diluted share, a penny short of First Call estimates. Its shares (GPS) were off 1 7/16 at 44 1/2 in NYSE trading Thursday morning.
But sales rose 23 percent in the quarter, and the clothing retailer said it expects to open 300 new stores, launch a new Banana Republic catalog and boost Gap's online business in 1998.
"[The expansion strategy] is amazing. If you live in Manhattan, you didn't think you needed another Gap," said Karen Sack, an analyst at S&P Equity Group. She said Gap's earnings report for the quarter was "terrific." 
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